Business Disability Insurance

What would happen to your business if you were paralyzed for one year? How about sustaining an eye injury for 6 months? To the unprepared business owner, an illness or accident resulting in disability can be devastating to your life and business. Disability insurance will replace your income in the event of an accident or illness. Before you express it could never happen to you, consider the hard facts.

According to the Disability Management Sourcebook, severe disabilities have increased 400 percent over the past 25 years from the age of 17 to 44. Before the age 65, one in seven people will become disabled for five years or more.

How Much Disability Insurance Do You Need?

If you think the government will take care of you, think again. Qualifying for disability benefits or Worker’s Compensation will be challenging and the size of the payout will more than likely result in an income shortfall.

The important decision your small business will have to make is how much disability insurance you need and can afford. Review your assets and liabilities to determine how long you can go without income. Assess your expenses and make the necessary adjustments for a disabled lifestyle. In the event of a disability, you might have enough financial resources for the short term but it’s more likely your business will need long-term disability insurance.

Determining your disability insurance needs, remember you cannot purchase 100% income coverage. Insurance companies will not cover your full income because they want to provide an incentive for you to go back to work. Typical coverage is 66% of your gross income, plus business overhead expenses can also be incorporated at part of your overall disability plan.